Yo, Money Matters Knowledge Quiz
How well do YOU know basic personal finance? Take this quick quiz to find out!
- 1.
Which of the following can be purchased with your debit card?
- A.
Your morning latte
- B.
Your school textbooks
- C.
Your weekly groceries
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A debit card can be used to make purchases for various items, including a morning latte, school textbooks, and weekly groceries. Debit cards are linked to a person's bank account, allowing them to make payments directly from their available funds. Therefore, all of the options listed can be purchased using a debit card.Rate this question:
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- 2.
Research shows that more than ___% of people share their PIN number with at least one person.
- A.
10
- B.
25
- C.
50
- D.
60
Correct Answer
C. 50Explanation
Research shows that a significant portion of people share their PIN number with at least one person. This suggests that a substantial number of individuals are not keeping their PIN numbers confidential and are potentially putting their financial security at risk. Sharing PIN numbers can lead to unauthorized access to personal accounts and potential financial loss. Therefore, it is crucial for individuals to understand the importance of keeping their PIN numbers private and not sharing them with anyone.Rate this question:
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- 3.
Debit cards are more similar to cash than credit cards.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Debit cards are more similar to cash than credit cards because both debit cards and cash allow for immediate payment and do not involve borrowing money. When using a debit card, the funds are directly deducted from the user's bank account, just like when paying with cash. On the other hand, credit cards involve borrowing money from the card issuer, which needs to be paid back later with interest. Therefore, debit cards are a closer equivalent to cash in terms of payment method.Rate this question:
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- 4.
What is the major advantage of a debit card over a credit card?
- A.
You don’t have to pay interest or monthly bills.
- B.
You have unlimited amounts of money to spend for as long as you like.
- C.
You don’t have to provide as much personal information to attain one.
- D.
You have access to a lender’s money.
Correct Answer
A. You don’t have to pay interest or monthly bills.Explanation
The major advantage of a debit card over a credit card is that you don't have to pay interest or monthly bills. Unlike a credit card, which allows you to borrow money from a lender and requires you to pay it back with interest, a debit card is linked directly to your bank account and allows you to spend only the money you have. This means that there are no interest charges or monthly bills to worry about, as you are using your own funds for purchases.Rate this question:
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- 5.
Debit cards have a credit limit.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Debit cards do not have a credit limit because they are linked directly to the cardholder's bank account. When a purchase is made using a debit card, the funds are immediately deducted from the account. Unlike credit cards, debit cards do not allow the cardholder to spend beyond the available balance in their account. Therefore, the statement that debit cards have a credit limit is false.Rate this question:
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- 6.
What is a good credit score?
- A.
Below 649
- B.
650-699
- C.
700-749
- D.
750+
Correct Answer
D. 750+Explanation
A good credit score is considered to be 750 or higher. This indicates a strong credit history and responsible financial behavior. Lenders and financial institutions generally view individuals with a credit score of 750 or above as low-risk borrowers, making it easier for them to obtain loans, credit cards, and favorable interest rates. A higher credit score reflects a higher likelihood of timely payments and lower credit utilization, which are key factors in determining creditworthiness.Rate this question:
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- 7.
Why are all credit cards the same size?
- A.
Credit cards are regulated to meet ISO 7810 standards.
- B.
The Treaty of Ghent designated a universal card size.
- C.
Because of the size of wallet slots, they have become standardized.
- D.
A card’s magnetic strip must be 3.375 inches wide to accommodate necessary information.
Correct Answer
D. A card’s magnetic strip must be 3.375 inches wide to accommodate necessary information.Explanation
The correct answer is that a card's magnetic strip must be 3.375 inches wide to accommodate necessary information. This is because the magnetic strip on credit cards contains important data that is required for transactions. In order to fit all the necessary information on the strip, it needs to be a specific size. Therefore, credit cards have become standardized to ensure that the magnetic strip can accommodate the required information.Rate this question:
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- 8.
What is a credit score used for?
- A.
To determine how much money you can borrow from a financial institution
- B.
To determine your interest rate
- C.
To reveal your reputation as a borrower
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
A credit score is used for all of the given options. Firstly, it helps financial institutions determine how much money you can borrow from them. This is because a higher credit score indicates a lower risk of defaulting on payments, making you eligible for larger loans. Secondly, your credit score is used to determine your interest rate. A higher credit score usually results in a lower interest rate, as it reflects a lower risk for lenders. Finally, your credit score reveals your reputation as a borrower, showcasing your history of managing credit and debt.Rate this question:
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- 9.
Which of the following is true?
- A.
A checking account allows you to deposit and withdraw money.
- B.
A checking account is a type of savings account.
- C.
A checking account only allows you to deposit and withdraw checks.
- D.
A checking account only allows for a limited amount of withdrawals and deposits.
Correct Answer
A. A checking account allows you to deposit and withdraw money.Explanation
A checking account is a type of bank account that allows individuals to deposit and withdraw money. It provides a convenient way to manage personal finances by allowing transactions such as cash deposits, check deposits, electronic transfers, and withdrawals through various channels like ATMs, online banking, and in-person transactions. Unlike a savings account, a checking account is designed for frequent transactions and easy access to funds, making it suitable for day-to-day expenses and bill payments. Therefore, the statement "A checking account allows you to deposit and withdraw money" is true.Rate this question:
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- 10.
Which of the following is true?
- A.
A savings account allows for an unlimited amount of withdrawals and deposits.
- B.
A savings account allows for a limited amount of withdrawals and deposits.
- C.
A savings account is a type of checking account.
- D.
A savings account is intended for money that you desire to access frequently.
Correct Answer
B. A savings account allows for a limited amount of withdrawals and deposits.Explanation
A savings account allows for a limited amount of withdrawals and deposits because it is designed to encourage individuals to save money rather than use it for frequent transactions. This limitation helps individuals to build up their savings over time by discouraging excessive spending or frequent withdrawals.Rate this question:
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- 11.
Savings accounts _________________.
- A.
Generally offer a higher interest rate than checking accounts
- B.
Generally are more liquid than checking accounts
- C.
Generally should be used for long-term holding periods
- D.
Generally offer the ability to write checks without incurring extra fees or expenses
Correct Answer
A. Generally offer a higher interest rate than checking accountsExplanation
Savings accounts generally offer a higher interest rate than checking accounts. This is because savings accounts are designed for individuals to save money over a longer period of time, while checking accounts are meant for everyday transactions. The higher interest rate on savings accounts incentivizes individuals to keep their money in the account and earn more over time.Rate this question:
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- 12.
What is an interest rate?
- A.
The rate at which your money inflates.
- B.
The percentage amount that you are borrowing from a financial institution.
- C.
The percentage amount of assets over debt that you have.
- D.
The rate at which a borrower is charged by a lender, expressed as a percentage of principal.
Correct Answer
D. The rate at which a borrower is charged by a lender, expressed as a percentage of principal.Explanation
The correct answer is the rate at which a borrower is charged by a lender, expressed as a percentage of principal. This explanation accurately describes the concept of an interest rate, which is the cost of borrowing money. It is expressed as a percentage and represents the fee charged by a lender to a borrower for the use of their funds. The interest rate is typically based on the principal amount borrowed and is charged over a specific period of time.Rate this question:
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- 13.
What is the simple interest formula?
- A.
Simple Interest =
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- B.
Simple Interest =
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- C.
Simple Interest =
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- D.
Simple Interest =
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Correct Answer
C. Simple Interest = -
- 14.
What is the compound interest formula?
- A.
Compound Interest =
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- B.
Compound Interest =
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- C.
Compound Interest =
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- D.
Compound Interest =
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Correct Answer
A. Compound Interest = -
- 15.
Which of the following is true?
- A.
Simple interest over time generates a higher interest amount.
- B.
Compounded interest takes into account the accrued interest from previous months.
- C.
Compounded interest is only used by banks.
- D.
Simple interest takes into account the accrued interest from previous months.
Correct Answer
B. Compounded interest takes into account the accrued interest from previous months.Explanation
Compounded interest takes into account the accrued interest from previous months. This means that the interest earned in each period is added to the principal amount, and the subsequent interest is calculated based on the new total. As a result, the interest amount grows exponentially over time. Simple interest, on the other hand, only considers the initial principal amount and does not take into account any previously earned interest. Therefore, compounded interest generates a higher interest amount compared to simple interest. The statement that compounded interest is only used by banks is not true, as it is a common concept used in various financial transactions and investments.Rate this question:
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Current Version
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Mar 19, 2023Quiz Edited by
ProProfs Editorial Team -
Apr 18, 2014Quiz Created by
Jamalasig
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